Speculation: Who Amazon Might Buy Next (and Why)

Last week I posted a critical take down of an article that looked at companies Amazon might buy in the near future. I didn't much care for that post because I thought none of the suggested acquisitions had much of happening for various reasons.

One thing I left out of that post, and this was an oversight on my part, was any mention of companies I think Amazon could buy. Sure, I did explain my best guesses about Amazon's acquisition strategies, but I didn't suggest any names.

Amazon buys tech companies (Ivona, Kiva Systems, Mobipocket) that Amazon thinks would be useful (product, tech, or skills) for some project Amazon is working on internally. It is sometimes unclear exactly how Amazon plans to use the startup, but I think Amazon always has some use in mind.

Amazon also buys retailers like AbeBooks, The Book Depository, Woot, Zappos, etc, that are successful in their niche. It’s my guess that Amazon buys these retailers to keep them from becoming a serious threat to Amazon (and also to keep new potential competitors from launching).

Focuses on a genre and be the best store for that genre. Take the niche not the market.

That is a good plan for building a profitable business, though it won't actually let you beat Amazon. It will, however, set you up to be acquired by Amazon in much the same way that the online retailers mentioned above were snatched up.

And that leads me to today's topic.

I expect that in the not too distant future Amazon's going to decide that they have gained as much control of the ebook market as feasible. That will lead them to find new advantages by buying up successful ebookstores and buying up tech companies that do something interesting with ebooks and or digital content.

Let's look at the ebookstores first.

But Nate, you say, Kobo's not for sale, iBooks isn't for sale, and who the fuck would want to buy Nook? And that's most of the market!

Well, no. I know that we are all used to saying that the Kindle Store dominates the ebook market but that's not completely true. It would be more accurate to say that the Kindle Store dominates one of the ebook markets; there are others. And so far as I know Amazon isn't in any of them.

There are more markets for ebook-like digital content than the one that the Kindle Store currently dominates, and it is in those other markets that Amazon might gobble up the biggest competitor. Let me give you a few examples of the type of companies that Amazon might buy.

Note: I am not saying Amazon will buy these companies or even that the companies are up for sale; these are merely examples of what I think Amazon would want to buy.

comiXology - This is the leading digital comics distributor and retailer (also paper comics). It's a privately held company which dominates a market for a type of content that Amazon only started selling 19 months ago. While it is a competing ebookstore and a competing tech platform, comiXology is for digital comics what AbeBooks is for used books or The Book Depository is for international book sales or Audible is for audiobooks.

OverDrive - No, I have not lost my mind. This is the single largest distributor of one type of library ebook content (there are several) and it offers content that is largely compatible with the Kindle platform. This is also a retail ebook distributor which can provide white-label ebookstores. This purchase would give Amazon control of a market in which they are merely dabbling at the moment while also expanding Amazon laterally (distribution).

Those are just 2 of the examples of possible future acquisitions, and I am sure there are more. TBH I am not all that familiar with other ebook markets so I cannot comment on other possibilities.

But I can suggest a few tech companies that might be the type of firm that Amazon could buy. Remember, Amazon has in the past bought companies so Amazon could use the tech internally (Kivo Systems, Mobipocket, Ivona, Goodreads, Shelfari, etc).

Foxit - I am leading with this PDF specialist because Amazon already owns part of the company, might be interested in buying the rest, and because I think this might be an example of Amazon buying a company after they already did what Amazon wanted.

Amazon launched their PDF ebook format, Kindle Print Ready, in August 2011 and then announced an investment in the company in December 2011. The events might be unrelated but that would make for a strange coincidence.

Vook - This firm launched in 2009 with the goal of publishing enhanced ebook appss for the iPhone. They then expanded their focus to include the iPad and other platforms. After it turned out that there wasn't much of a market for enhanced ebooks., Vook pivoted to producing enhanced ebooks for clients. And after that didn't work out they pivoted to distributing ebooks for clients (while still making enhanced ebooks on request).

Discovery - Discovery is a hot buzzword right now. While many are misusing the word to mean "marketing", there is some value in finding new ways to connect readers with books they might like (and buy). I am sure Amazon is expending a lot of energy on this topic but if they found a startup that had a clever and functional idea and that startup was for sale, I think Amazon might buy it. (Given that Goodreads had been working on a discovery engine, I think Amazon already is buying improved discovery tech.)

TypeEngine - This is a recently launch startup that enables small publishers to create a digital magazine quickly and easily. It can support anything from a weekly magazine the size of The Magazine to a publication nearly as complex as Wired's digital magazine (or so I have been told). It would be a great way to get content on to the Kindle Fire and into the Kindle Store (the blog2Kindle functions suck, IMO).

BookLamp - This is one of those startups that is hard to explain (because they're doing something new and unique). In this case Amazon would be interested in buying The Book genome Project, a unique analytics engine that would give them a better understanding of the components and meta-components of a book.

The Digital Reader - This blog is not necessarily for sale, but if Amazon (or Google or MS or Apple) is interested in any of the ideas expressed on the blog, the person who thought them up can be hired as a consultant.

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At this point I have probably managed to rearrange your thinking in at least 3 different directions, so I am going to cut this post short.

I am not certain that the companies mentioned above do anything Amazon needs, but they are examples of the type of companies that Amazon might decide to acqui-hire in order to gain access to useful tech or skills.

Nate Hoffelder

Nate Hoffelder is the founder and editor of The Digital Reader: He's here to chew bubble gum and fix broken websites, and he is all out of bubble gum. He has been blogging about indie authors since 2010 while learning new tech skills at the drop of a hat. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

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17 Comments

Jeff Bezos18 July, 2013

I have decided to buy your site. Tomorrow morning a truck full of money will arrive at your door. Otherwise we will buy your ISP and have you shut down. Oh, they do good enough job doing that on their own time to time.

Comixology is like the others you mention a great get. One thing that *might* gum up an acquisition there is whether or not the deals with the publishers like Marvel would continue after a sale. (Hulu for example only has streaming deals set up for a couple years forward, should it be acquired there is no guarantee the content deals would be renewed.)

One thing I keep thinking of is Netflix. Amazon tried to get Netflix before and failed, and Netflix would be very costly. But Amazon is already streaming the Netflix videos, so if Amazon bought Netflix it would be one department paying another. Plus wonderful synergies between the Netflix user ratings and recommendation engine and imdb.com and Amazon selling new and used DVD disks.

Does Amazon own any college textbook pubs? I doubt Amazon would want to buy any college bookstores, but maybe some sort of digital equivalent, getting Amazon servers inside the university LAN?

Hard to argue with that list. One thing to add, though: Amazon also buys companies that do something they do but (for some reason) do it much better. (Diapers.com, for example.) With that in mind, Comixology does look to be a ridiculously good fit, especially since they apparently haven’t been impacted by Amazon’s entry into their business.

A good point to keep in mind is that Bezos is building up Amazon the compay, not just Amazon the web-retailer. Hence the pure tech buys like Kiva and Ivona.

Other companies/products Amazon has been buying are distressed publishers and/or their catalogs. Moving forward, I could see them picking up small, *well-run* genre publishers as well as genre retailers. (BAEN for the former, AllRomance for the latter–just throwing “scary” names out there.)

They might also pick up one or more of the educational ebook startus floating around. For now, Amazon is using most of its profits to invest in infrastructure but some time soon that build up will switch to putting that bigger, better infrastructure to work so some buys along those lines would be logical; that is, buying in physical product vendors, not just digital products.

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